G20 makes little progress on climate financing

Toni Vorobyova and Anna Willard, Reuters 7 Nov 09;

ST ANDREWS, Scotland (Reuters) - Rich countries and developing nations fought over climate change on Saturday, failing to make progress on financing ahead of a major environmental summit in Copenhagen next month.

Britain, which was hosting a meeting of G20 finance ministers in Scotland, was determined to push toward a $100 billion deal to cover the costs of climate change by 2020.

But talks got bogged down in a row with large developing countries about who should foot the bill.

"There was a heated argument," Russian Finance Minister Alexei Kudrin said.

"I think we should be very careful in approaching the possibility of piling big new commitments onto developing countries as this can put a brake on the pursuing of other crucial tasks such as the eradication of poverty."

The climate change discussion had dragged on for hours and a French official said the debate was so intense there was a risk the final statement would not mention climate change at all.

In the end, they agreed on the need "to increase significantly and urgently the scale and predictability of finance to implement an ambitious international agreement."

European Union leaders agreed in October that developing countries would need 100 billion euros a year by 2020 to battle climate change.

About 22-50 billion euros of the total will come from the public purse in rich countries worldwide and the EU is expected to provide between 20 and 30 percent of that.

"It's a bit disappointing because we would have liked to have done a little bit more work," said French Economy Minister Christine Lagarde, adding that Europe's offer was "substantial."

STUMBLING BLOCK

China is often denounced by Western critics as the main obstacle to agreement, because it argues developing countries should not submit to binding international caps on emissions while they grow out of poverty.

In turn, China and other emerging powers have said the rich countries have done far too little in vowing to cut their own greenhouse gas output, and in offering technology and money to the Third World to help cope with global warming.

"We have not come as far as we had hoped even this morning," said German Finance Minister Wolfgang Schaeuble.

"We have not reached an agreement. There is still some work to do. I hope everybody knows that Copenhagen must not be a failure."

A European source said there was also frustration in a sunny St Andrews at the stance of the United States, who were sitting on the fence over climate change financing.

A 175-nation U.N. meeting in Barcelona ended on Friday with little progress toward a global deal on climate change but narrowed options on helping the poor to adapt to climate change, sharing technology and cutting emissions from deforestation.

The final U.N. preparatory meeting before Copenhangen re-opened a rich-poor divide on sharing the burden of curbs on greenhouse gas emissions and criticism of the United States for not tabling a formal, carbon-cutting offer.

About 40 world leaders will go to Copenhagen next month to improve the chances of clinching a climate deal, the United Nations has said.

British Prime Minister Gordon Brown, addressing the G20 delegates, said climate change was a test of global cooperation every bit as stern as the world financial crisis.

(Additional reporting by Gernot Heller and Jan Strupczewski, writing by Sumeet Desai and Patrick Graham; editing by Mike Peacock)

G20 fails to reach pre-Copenhagen climate finance deal
Katherine Haddon Yahoo News 7 Nov 09;

ST ANDREWS, Scotland (AFP) – G20 nations fell short of reaching agreement on climate finance a month before key UN talks, while pledging Saturday to maintain stimulus measures for a still "uneven" global economy.

The 20 leading economies committed to work for an "ambitious outcome" at December's vital Copenhagen climate change conference, but could not achieve their goal of agreeing how to distribute funding to poor countries to tackle the problem.

"We committed to take action to tackle the threat of climate change and work towards an ambitious outcome in Copenhagen" where countries will seek agreement on slashing greenhouse gas emissions, the communique said.

Finance ministers also said they would stick to emergency stimulus support measures despite signs that the world was emerging from a 12-month financial maelstrom.

"We are not out of the woods yet and we need to maintain the measures we have taken," Alistair Darling, finance minister of G20 president Britain, said.

With the world's biggest economy barely out of recession, US Treasury Secretary Tim Geithner said there was a "very broad consensus that growth remains the dominant policy."

Meanwhile, a proposal by British Prime Minister Gordon Brown for a tax on global financial transactions got a lukewarm response, with the United States offering no support.

A month before the December 7-18 Copenhagen conference, the G20 said it was fully behind fighting climate change, though it promised only to "take forward" work on funding and provided no figures.

"We committed to take action to tackle the threat of climate change and work towards an ambitious outcome in Copenhagen," the communique said.

"We discussed climate change financing options and recognised the need to increase significantly and urgently the scale and predictability of finance to implement an ambitious international agreement."

But there were signs of discord on the issue.

A French source told AFP late Friday that some emerging countries say the G20 is not the "appropriate forum" to discuss the issue.

Darling had earlier acknowledged there were "different views" around the table which would lead to "arguments."

"If there isn't an agreement on finance, if there isn't an agreement about contributions to make sure we can deal with this problem, then the Copenhagen agreement is going to be much, much more difficult," he said.

The outcome was criticised by campaigners including environmental group WWF.

In a statement, it said the G20 had "failed to reach agreement on the financing required for a global agreement to stave off catastrophic climate change" and voiced "scepticism" about promises to make further progress before Copenhagen.

Brown had earlier urged the G20 to consider a tax on global financial transactions, known as a Tobin Tax, as part of a new "social contract" for banks.

The move would be one way of reflecting the "global responsibilities" which financial institutions have to society, said Brown, who has in the past been wary of such a tax because of fears it could harm Britain's financial sector.

Asked by Sky News television whether he backed a Tobin Tax, US Treasury Secretary Tim Geithner said: "No, that's not something that we're prepared to support."

In a later press conference, he added: "I think it is fair to say that we agree that we have to build a system in which taxpayers are not exposed to risk of loss in the future."

He said that "we look forward to working with our counterparts" on how to avoid this although declined to say if the US would actively oppose such a tax.

Brown stressed Britain would not act alone on the Tobin Tax, saying it would also have to be implemented by all the world's major financial centres, including the US, Europe, Asia, the Middle East and Switzerland.

"Let me be clear: Britain will not move unless others move with us together," he said.

Earlier, around 200 people, many dressed in bankers' pinstriped suits, gathered on a beach in St Andrews to protest against the meeting -- claiming the talking had to stop and firm action taken.

Climate finance hits snag before key UN summit
Katherine Haddon Yahoo News 8 Nov 09;

ST ANDREWS, Scotland (AFP) – The G20 talked big but delivered little on climate finance, campaigners said Sunday, as the clock ticks down to the UN's key Copenhagen summit in just one month's time.

One of the key talking points on Saturday for finance ministers meeting in the Scottish town of St Andrews had been working out how to deliver cash from rich to developing countries so they can tackle climate change.

The G20 agreed to work for an "ambitious outcome" at Copenhagen, which aims to cut greenhouse gas emissions. They also "recognised the need to increase significantly and urgently the scale and predictability of finance."

But there was no agreement on how cash should be delivered, although there would be "further work" on the issue, the final communique said.

Nor was there a clear figure for how much G20 countries would commit, although sources had played down hopes that this would be achieved before the meeting started.

With the Copenhagen talks starting on December 7, time is running out for a financial agreement to be in place by then.

"If there isn't an agreement on finance, if there isn't an agreement about contributions to make sure we can deal with this problem, then the Copenhagen agreement is going to be much, much more difficult," Alistair Darling, finance minister of hosts Britain, warned before the final session on Saturday.

Campaigners expressed disappointment at the meeting's outcome.

British charity Oxfam's senior policy adviser Max Lawson said: "The G20 has once again failed to live up to its rhetoric on climate change.

"As the clock ticks towards Copenhagen, the hundreds of millions of people around the world who are already suffering as a result of climate change cannot afford to wait any longer for a deal."

Richard Dixon, director of WWF Scotland, said the failure to reach agreement on funding was a "major disappointment."

"We wanted to see solid proposals on how the money would be raised, managed and distributed and an indication of how soon the countries most vulnerable to climate change will receive assistance," he added.

"The G20 has failed to deliver and the real work will now have to be done at Copenhagen."

Yvo de Boer, the UN's climate chief, said at the end of last month there were two "major opportunities" to make headway on finance before December.

One was the G20 finance ministers meeting in St Andrews the other was an EU summit earlier this month when leaders agreed that developing nations would need 100 billion euros (150 billion dollars) a year annually by 2020, but failed to agree how much individual countries would give.

So has all hope for a finance deal ahead of Copenhagen disappeared?

Darling on Saturday proposed that Britain, which is G20 president until the end of the year, could convene "a small group of countries which have particular problems."

"I am confident we can make progress at Copenhagen," he added.

There are also other chances for the international community to get together.

These include the Asia-Pacific Economic Cooperation (APEC) forum, bilaterals between the United States on one side and China, India and Japan on the other, and meetings between the European Union (EU) and China and India.

There will also be a restricted ministerial-level meeting among key countries in the UN Framework Convention on Climate Change (UNFCCC) negotiations and talks among major economies that together account for 80 percent of the world's carbon output.

In Copenhagen itself, leaders could be there to give a final push in the closing days or hours -- Brown has said he will be there and Brazilian President Inacio Lula da Silva has urged others to attend.

Q+A: Climate change finance -- how does it work?
David Milliken, Reuters 8 Nov 09;

ST ANDREWS, Scotland (Reuters) - Discussing how to pay for efforts to combat climate change was a major theme at Saturday's meeting of finance ministers and central bankers from the Group of 20 leading economies.

Ministers made little visible progress in sorting out the thorny issue of how rich countries should help poorer ones fight global warming, but did agree that a big increase in funds was needed.

Following is a guide to the financing issue ahead of a United Nations summit on climate change in Copenhagen next month:

WHAT IS CLIMATE CHANGE FINANCE?

It covers a broad range of proposals to fund schemes in the developing world which reduce emissions of carbon dioxide and other gases that cause climate change.

The schemes are usually based on funding from governments and investors in richer countries -- in part because a dollar of spending can achieve a greater reduction in emissions in the developing world. Possibilities for cheap reduction of emissions in developed countries have largely been exhausted. Moreover, spending money on fighting climate change is not a priority for many developing countries, which blame industrialized nations for the problem. They argue spending on health, education and other poverty-reduction measures bring more immediate improvements to the quality of life.

Some schemes aim to mitigate the effects of climate change -- for example by boosting flood defenses -- where this is cheaper or more urgent than trying to reverse global warming.

WHO WOULD PAY?

Primarily governments and investors in rich countries. The European Union estimates effective action would cost 100 billion euros ($149 billion) a year, around a quarter to a fifth of which would be funded by taxes.

How the taxes would be levied is unclear. Options include charging firms for permits to emit carbon dioxide, taxes on financial transactions, and a tax on actual carbon dioxide emissions.

Private sector investment can be attracted since many schemes help save money by reducing energy costs. Some governments are also keen to have private sector involvement because they believe profit-driven investors are better at picking successful energy-saving technologies than civil servants or non-profit groups.

WHO WOULD RECEIVE THE MONEY?

Some funds would go directly to governments -- either administered by the World Bank, as some rich countries prefer, or via the United Nations, preferred by some poorer countries.

Other funds could pay for carbon emission credits which would go to firms that proved their investments had helped reduce carbon dioxide emissions. The UN has recently expanded such a scheme.

WHY ARE GOVERNMENTS SO IMPORTANT?

Public sector funding to combat climate change is crucial because the benefits of avoiding climate change will be felt too far in the future for the private sector to spend optimal amounts of money.

Also, the benefits of solving the climate problem will be felt by the entire population, not merely by investors.

WHO SUPPORTS/OPPOSES?

The EU supports greater rich-world financing of measures to tackle climate change, and has its own internal market for permits to emit carbon dioxide. It has promised to pay its "fair share" of the 100 billion euro annual costs.

The United States and Japan have both agreed in principle to help poorer countries fight climate change, but have been even vaguer about the details.

(Editing by Andrew Torchia)